The City watchdog has bowed to pressure from MPs for independent legal scrutiny of a controversial report into mistreatment of small businesses at Royal Bank of Scotland.
Financial Conduct Authority (FCA) chief executive Andrew Bailey has agreed to a proposal from the Treasury Select Committee to appoint a legal adviser to compare the regulator’s soon-to-be published summary with the underlying report into the scandal at RBS’s controversial restructuring unit.
The move comes after the committee – headed by new chairwoman Nicky Morgan – last week wrote to Mr Bailey threatening to use its “formal powers” to demand publication of the leaked report if its request was denied or if it was not happy with the findings.
In response, Mr Bailey agreed to give the summary and full report to the legal adviser – set to be Andrew Green QC – to assess whether it is a “fair and balanced summary”.
But he stressed in a letter to Ms Morgan that this would be “an exceptional case and does not establish a precedent”.
Following a review by the committee’s adviser and the FCA’s own legal adviser, the regulator will publish a final account.
Ms Morgan said: “The advisers will now start their work and report to the committee before Mr Bailey’s appearance at the end of the month.
“If the advisers’ report does not provide the committee with the assurances it needs, it will decide whether any further steps are required.
“There is no good reason for the committee’s review to delay the FCA from publishing its summary as soon as possible.”
The FCA has so far refused the committee’s demands to publish the report in full, claiming it would reveal confidential information about individuals, and has instead offered a detailed summary.
The committee intervened in the saga last month, calling for publication of the report into misconduct at the bank’s Global Restructuring Group (GRG) following a leak to the BBC in August.
Mr Bailey pushed back, saying that publishing the skilled persons or Section 166 review – which collects insight about a firm’s activities from third parties – would mean revealing confidential information about the individuals who contributed to it.
But in his latest letter to Ms Morgan, he said the report and confidential information can be seen by legal advisers using a so-called “self-help gateway”.
He also insisted the legal adviser takes into account the “justification and reasonableness” for why some information from the full report cannot be included in the summary.
The committee’s calls for publication have echoed those by the SME Alliance and lawyers suing RBS on behalf of businesses affected by the scandal – which allegedly saw RBS’s turnaround unit intentionally push businesses towards failure in hopes of picking up their assets on the cheap.
The study was commissioned by the regulator almost four years ago as part of its inquiry into the GRG, and while the FCA pledged last November to publish a “full account” from the skilled persons report, it has so far refused to make it public.
The FCA also has yet to decide whether the case requires a formal investigation.